Last week I carried the story of UpTake taking in a second round of $10mm to bring total amount raised to $13.95mm. In original post I wondered aloud why they had needed to raise a second round so close in time to the first round. Unfortunately due to some overzealous spam filtering in my gmail account I did not receive a reply to this pondering from Uptake CEO Yen Lee in time before the story was posted. That said, it looks like Yen's timing on this round could not have been better. Uptake announced the raising on September 16. September 17 the Dow closed down 450 points or more than 4%. In other words it seems they managed to close the deal moments before the recent round of AIG and Lehmann led shocks that are almost certain to dry up start-up company investment funds. Companies post this dark week on Wall Street are going to find it much harder to raise money as investors hunker down and wait for more clarity (or queue up from free tax payer funds as part of the bail out bonanza!).
As to valuation - Yen below says that "the valuation was very fair" and "we didn’t necessarily need to raise the round ". This is usually code word for an "Up Round" (where the valuation is higher in Series B than Series A). But is doesn't sound like the valuation was dramatically increased.
Finally Yen is on the hunt for talent (see interview below for details). With money in the bank and people in under-funded business looking nervously at their bosses this should be a good time to recruit.
Below is a slightly edited version of my email interview exchange with Yen that should have gone with the original post. If you want some background here my earlier interview with Yen.
BOOT -Who joined the Round?
Yen - Trinity Ventures led the round and Shasta Ventures, who led Series A, co-invested. Trinity has been looking at online travel for many years without pulling the trigger but they were really excited about our business model and specifically how we would solve the consumer acquisition challenge. Specifically, how our technology approach allowed us to create an infinite number of niche pages (e.g. Monterey romantic hotels) to dominate the torso and tail on SEO.
BOOT - How much and at what valuation?
Yen- We aren’t disclosing specific terms other then to say we raised more then $10M. Referring in advance to my answer to Q7 below, we didn’t necessarily need to raise the round now, so the valuation was very fair.
BOOT - What are the plans for the money? What about international destinations and non-eng languages?
Yen - ... building a search application is not for the faint of heart – nor is it cheap! Especially since we make the investment to not just spider all the travel content we can find but also to structure it. Despite the strong progress we have made, we think we are just getting started, so most of the money will be for continued product development. We are absolutely committed to helping consumers globally with their travel decision making. We don’t know the specific timing of when we venture outside North America although we will have a better estimate by end of Q1, 2009.
BOOT - If people are part of the plans (ie recruitment) what are the main areas that you need to attract people? Has hiring become slightly easier recently with economy downturn?
Yen- Yes, headcount is the lion’s share of our expenses and will continue to be as we scale our offering. Are you offering me a soap box to help with recruiting? Then ... we are continuing to look for engineering talent. Specifically more problem solvers on each of our three technology layers. We need engineers with domain knowledge in spidering the web and mining unstructured data, natural language engineers with experience parsing text to extract sentiments, and data warehouse developers who have built multi-stage data processing pipelines. We also need engineers who have built ranking algorithms and contextual targeting solutions. Finally, we need application and UI engineers.
Silicon Valley is really a little micro-economy unto itself and the increasingly tumultuous macro-economic conditions haven’t affected our little corner of the world – YET. While there is certainly more candidates out there now, it has less to do with the macro-economy then the number of engineers and others from Silicon Valley stalwarts like Yahoo, eBay and even Google who are looking for opportunities to show what they can accomplish in a nimble, focused environment. We are also seeing more candidates from the earlier generation of vertical search companies that generally just reprocessed already structured data and therefore found it challenging to differentiate and get market traction.
BOOT - the Site was constructed around organic search marketing. Any need with this new money to expand into spending money on market (paid search or otherwise)?
Yen - Nope. We are growing 30% month on month and have no plans to deviate from our successful playbook.
BOOT How are monetisation plans going?
Yen - We have been pleasantly surprised by the number of consumers clicking on paid leads. We certainly haven’t emphasised that on our site, but the consumers tell us we offer them all the information they need to decide whether that hotel or attraction is a good fit, so checking rates and availability is the natural next step.
BOOT Series A was just a couple of months ago. Why the need to raise again so soon?
Yen- We didn’t necessarily to raise now, but there is an old adage that the right time to raise is when you don’t need the money! And our decision was made easier given the shaky macro economic environment, our confidence that we have proven our approach works and we are ready to scale, that we have known the Trinity Ventures team for a long time and wanted to work with them, and that they made a very fair pre-emptive offer.
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well done to Yen to raise so much capital. I can vouch that it's better to raise capital when you dont need it, though not that I've ever experienced or seen it first hand.
I have to admit though that I'm not convinced that the zero content travel agent comparison model really has legs, given the supplier trend toward price parity. i.e. one comprehensive OTA should be enough?
But then again lots of people dont know brands and do start with search engines & sites like travelbuddy.com got acquired so I guess there is an appetit for such businesses from media players.
Indeed Yen, well done. It is always better to have good timing rather than the best product. In this case it looks like you might have a bit of both.
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